Will another check soon be in the mail?
Photo: Eric Gay/AP/Shutterstock
For many Americans who haven’t lost jobs or don’t own businesses, the central feature of the CARES Act — passed in March to offset the economic effects of the COVID-19 pandemic — was the $1,200-per-person payments it authorized. Since the economic recovery is slowing down and the pandemic is speeding up, there’s been considerable sentiment in both parties for a second round of stimulus payments. During a long period of on-again, off-again negotiations between the White House and congressional Democrats with sharp disagreements on a range of issues, both sides in those talks have embraced a second check (though conservative Republicans in Congress aren’t on board), with the key issue being whether an overall deal can be reached.
October has been a roller coaster, though. Just as talks had resumed and seemed to be making slow progress, the president abruptly ended them on October 7, sharply criticizing Democratic efforts to provide assistance for state and local governments and saying a new bill would be developed “after I win.” That happened on the very same day when Federal Reserve Chairman Jerome Powell called additional stimulus critical to the short-term health of the economy. Almost immediately, Trump began back-tracking, but sowed additional confusion by alternatively pursuing single-issue legislation and broader agreements. He did, however, authorize another resumption of talks between administration negotiator and Treasury Secretary Steven Mnuchin and Democratic negotiator and House Speaker Nancy Pelosi.
Slowly and painfully, Mnuchin and Pelosi made progress towards each other’s positions, even as Senate Republicans (who mostly want little or no stimulus) grumbled about Mnuchin’s generosity in a veiled swipe at Trump’s own eagerness for a pre-election deal and voted for two “skinny” stimulus bills that did not include a second stimulus check. Now while talks theoretically continue, mostly because no one wants to get blamed for calling them off, a pre-election deal is more or less out of the question.
As my colleagues Eric Levitz and Adam K. Raymond explained,
the IRS (which Congress put in charge of the payments) was instructed to make approximately 159 million payments. The amounts varied depending on income and number of children in the household. Those earning up to $75,000 — or $150,000 for married couples — got the full check; partial payments were available to individuals earning up to $99,000 or couples earning $198,000. Parents received an additional $500 for each dependent child.
People who had already given the IRS direct-deposit bank information received the first payments; instead of a paper check, they got a direct deposit. It was tougher for others, which is why some eligible people waited a long time on paper checks — or in some cases, debit cards — in the mail.
House Democrats proposed a similar second round of stimulus checks in the so-called HEROES Act they passed back on May 13. The income thresholds and individual check amounts ($1,200) were the same, but the payment for dependent children was boosted from $500 to $1,200, up to a limit of three. So a two-parent family with three kids and income under $150,000 could receive total payments of $6,000 ($2,400 for the parents, $3,600 for the dependent children).
In late September Speaker Pelosi unveiled a Democratic compromise proposal with the same payments for adults and the same income thresholds, but lowered checks for kids to the levels in the CARES Act.
The overall HEROES Act authorized $3.4 trillion in new spending, with nearly a third of that being devoted to assistance to state and local governments experiencing dire fiscal conditions due to falling revenues and rising demands for services. The above-mentioned compromise proposal from House Democrats (presumably with the concurrence of this Senate colleagues) offered a pared-back $2.4 trillion version of the HEROES Act. Even as negotiations with the White House continued, the House passed the compromise proposal to ensure Members had a new proposal to take home to the campaign trail.
For months Senate Republicans, who don’t want to give the impression that they have to negotiate over House Democratic proposals, largely dismissed the HEROES Act as a “liberal wish list” or as a “political messaging bill” not seriously intended to go anywhere. But their criticisms mostly focused on the overall $3 trillion-plus price tag, provisions for aid to state and local governments, and an extension of the $600 federal unemployment insurance add-on until the end of the year.
More generally, many congressional Republicans and conservative opinion leaders argued for a “pause” in stimulus efforts until the $2.2 trillion authorized by the CARES Act is fully distributed and states are given the opportunity to reopen businesses. They have also been very concerned about providing corporations with a liability shield against coronavirus-related lawsuits and damage claims. In line with the president’s shift toward demanding “reopening,” his supporters in and beyond Congress have focused on easing of restrictions on businesses rather than federal stimulus as the key to economic recovery, though more recent coronavirus spikes may be beginning to change that dynamic.
Some congressional Republicans would clearly prefer to avoid a costly second stimulus check, but with the Trump administration generally signaling its interest in another round of checks GOP leaders shifted tactics to an emphasis on holding down the overall price tag of a future stimulus bill. As early as mid-May, Mitch McConnell began promoting the idea of a $1 trillion “cap” on any future stimulus bill. The idea may be arbitrary, but it seems to have caught on among Republicans who aren’t opposed altogether to another stimulus bill.
After some talk publicly and privately of making the second stimulus checks available to a narrower group of low-income households, Republicans announced their own HEALS Act that included a second round of stimulus checks of the same size and with the same eligibility criteria as the CARES Act checks.
But most recently, as negotiations seeking a compromise between HEALS and the HEROES Act ground to a halt, Senate Republicans began to develop a new “skinny” stimulus proposal aimed at keeping fiscal hawks in line that omits a second stimulus check altogether. It was unveiled on September 8 with an advertised price tag of a mere $300 billion, though that was accomplished by clawing back $350 billion in unspent CARES Act funds. The bill was blocked by Senate Democrats, but it achieved near-universal backing from Senate Republicans, and gave the more vulnerable members of their conference a campaign trail credential. A second “skinny” bill without checks was brought to the Senate floor on October 21 with precisely the same result.
Trump and his staff have been less enthusiastic about stimulus checks than Trumpian favorites such as a payroll tax cut, but the president himself expressed some understanding that, politically, regular folks need to be cut in on any new stimulus deal. In mid-May the president himself said “I think we are going to be helping people out,” and “getting some money for them.”
In the wake of the surprisingly strong May jobs report, Trump briefly talked about the economy recovering “like a rocketship,” and another upbeat jobs report in June buttressed Republican hopes that little or no immediate stimulus would be necessary. But the more recent spike in COVID-19 cases centered in states that had reopened businesses quickly, and the return of business restrictions and stay-at-home orders in many states, have dampened economic optimism, even as the president’s sinking reelection prospects are giving fresh impetus to the idea he needs to identify with calls for additional relief to individuals.
On June 22 Trump answered a question about a second stimulus check affirmatively if vaguely, and then the Washington Post suggested the White House was divided on the subject.
As noted above, all the back-and-forth inside and beyond the White House gave way to a HEALS Act that does include a second stimulus check identical to the first. But congressional Republicans quickly moved away from it as the White House remained silent.
As CARES Act provisions expired in August, Trump issued orders providing temporary funding for unemployment insurance and a new tenant eviction moratorium, while promoting his unpopular pet idea of a payroll tax deferral.
But even as Senate Republicans prepared to release their first “skinny stimulus” proposal clawing back unused CARES Act loan funds, Trump casually suggested at a White House press briefing that Congress authorize him to utilize some of those same unused funds to issue a second stimulus check. This idea seemed to go nowhere at all.
And in mid-September, Trump reacted favorably to a bipartisan proposal from the centrist House Problem Solvers Caucus that spent $1.5 trillion over a shorter period of time, and included the same stimulus check provisions as the CARES Act. This seemed to jolt the talks between Pelosi and Mnuchin back on track, and the Treasury Secretary soon provided a “counter-offer” reportedly based on the Problem Solvers Caucus, which was itself private encouraged by Pelosi.
As recently as October 3, as he resumed tweeting from Walter Reed Medicaid Center after his hospitalization for COVID-19 treatments, Trump was encouraging the parties to come to closure on a deal.
Then came his abrupt termination of talks and their equally abrupt resumption. Again, it’s unclear at this juncture why he reversed field twice; his tweeted explanations attacked Democratic positions his negotiators had already largely accepted. He further confused the situation and alienated Senate Republicans by publicly saying he wanted a stimulus package even more expensive than Pelosi’s, though without offering details.
Eventually the Pelosi-Mnuchin talks slowed to a crawl, with alleged progress on the COVID-19 testing and strategy provisions but still big differences over state and local government assistance, tax provisions, and the coronavirus liability shield Republicans have made a priority. Eventually Congress went home and time ran out for a pre-election deal, with Trump again indicating a big stimulus package with a second check would happen after he wins and Republicans take over the House (an extremely unlikely scenario).
If Trump loses the election, he has no particular incentive to work hard on a deal during a lame duck session of Congress, and no leverage in negotiations, particularly if his party loses the Senate as well. As for Pelosi, she’d have every reason in the world to wait for a new Biden administration in January and move legislation then.
If Trump wins and his party does hang onto the Senate, the negotiators will be right back where they are today, and negotiations could pick up where they left off, unless one side or the other has a reason to wait for the new Congress and the inauguration. Congress does have to come back to Washington to keep the federal government operating when a stopgap spending bill expires on December 11, which could in theory provide a vehicle for some relief.
All in all, though, the best bet is some sort of stimulus early next year, unless the pandemic and the economy really get worse, which could jump start talks earlier. More likely, the needs we’ve been talking about all summer and fall will be addressed in broader legislation offered by a new or reelected president, which would contain a short-term stimulus component.
If the economy continues to struggle and the political deadlock is resolved one way or another, then additional stimulus will eventually be provided and a second stimulus check will likely be part of the mix of remedies. But no one should plan to get it in time to pay for Xmas presents this year.
